Author’s note: Workshop participants are welcome to read as much of the following as they want.
There are two main discussions in the chapter, one on political economy ideas of Bourbon Spain
and Adam Smith's "system of natural liberty" and their influence on New Spain at the end of the
colonial period; and the other mainly on Adam Smith's influence in Mexico after Independence.
The presenter would prefer that people focus on what interests them the most. This chapter is still
due for revision, so any comments, questions will be welcome.
------------Political Economy and Its Uses in Mexico
After Independence
By Jesús Alvarado
“After the Wealth of Nations, men began to see the world about themselves
with different eyes; they saw how the tasks they did fitted into the whole of
society, and they saw that society as a whole was proceeding at a majestic
pace toward a distant but clearly visible goal.”
Robert Heilbroner.1
“The Mexican [nation]... is very distant from the order of things presupposed
by the principles of the science[of political economy]... and therefore they
cannot be applied without a remarkable modification.”
Francisco García.2
Introduction
“Political economy” was the buzzword of the day. In September of 1823, as the Constituent
Congress debated the need to create a chair of political economy in the capital of every state in
Mexico, Carlos Maria de Bustamante declared:
1
Robert Heilbroner, The Worldly Philosophers: The Lives, Times and Ideas of the Great
Economic Thinkers (New York: Simon and Schuster, 1998), 41.
2
Francisco García, “Esposición sobre el dictamen en que la comisión ordinaria de Hacienda
consulta la prohibición de ciertas manufacturas y efectos extrangeros” (Mexico: Imprenta de
D. Mariano Ontiveros, calle del Espíritu Santo, 1823). Reprint: Protección y Libre Cambio,
30.
“If we do not awake now from the slumber in which we have lain for so many
centuries; if we do not take advantage, as much as it is possible, of... [political
economy] ideas, they will never be practiced. The nation (Vuestra soberanía) will not
have politicians, ministers, or representatives in Congress [who are] instructed on this
3
great science which contributes (cede) so much to the benefit of peoples”.
Bustamante was not alone in his enthusiasm. Political economy had a great appeal for the
Criollo elite as a means to move away from colonial darkness (obscurantismo) and to organize the
new nation following scientific principles. The Commission on Public Instruction enlarged the
proposal submitted to Congress, by asking to establish two weekly lectures on political economy in
each school and university of the country. This reform was part of a curriculum reform the Judiciary
[Adjudicating, Judging, Dictaminadora] Commission hoped to present in order to get rid of
4
“scholastic jargon.”
For the intellectual and political elites of the new country, political economy was virtually
equivalent to Adam Smith’s “system of natural liberty,” directly learned from Smith´s Wealth of
Nations or through his popularizer and systematizer Jean Baptiste Say. Another major influence on
free trade advocates were the comercio libre ideas and practices developed by Bourbon administrators
of the Spanish empire in the second half of the eighteenth century, before Adam Smith’s “system of
natural liberty.” In both cases, the strict adherence of Mexican free traders to theory depended
5
sometimes on pragmatic considerations.
Moreover, as we saw in Chapter 4, not everybody was convinced that free trade was the right path
for Mexico’s economic development after Independence. In the economic debates of the early
republic, national industry advocates appropriated political economy in a pragmatic way, not as a
science whose facts were “natural,” but to support their own arguments against free trade policies and
3
Elí de Gortari, La ciencia, 278.
4
For the debates in the Constituent Congress on the role of political economy in education,
see, for example, de Gortari, La ciencia, 279-280; Jesús Reyes Heroles, El liberalismo, 123127.
5
According to Charles Hale, doctrinaires regarded the “economists” -–Adam Smith, Jean
Baptiste Say, Gaspar Melchor de Jovellanos, and later, Alvaro Florez Estrada–- with great
reverence. “As authorities on economic questions, these men went unchallenged.” Hale,
Liberalism, 249-250.
3
for the development of domestic industry.
In what follows, I will look in more detail at Adam Smith’s ideas on free trade in his Wealth
of Nations, different than the “free and protected trade” (comercio libre y protegido) promoted by the
Spanish Crown. Second, I will examine the role played by political economy in the Spanish Empire,
beginning with the precursors and creators of comercio libre policies in eighteenth century Spain, as a
first major influence on Mexicans’ ideas on free trade. Next, I will look at the reception of Adam
Smith and of his follower Jean Baptiste Say both in Spain and New Spain since the end of the
eighteenth century. Finally, I will look at the reception of Adam Smith in Mexico after Independence,
as a central influence for free trade and national industry advocates.
Adam Smith’s Political Economy
Political economy emerged in the eighteenth century as a science which defined in a new way
the role of the state and of individual agents in economic activity, reflecting changes taking place in
6
Europe and the rest of the world. As Adam Smith proposed in his definition,
“Political economy, considered as a branch of the science of the stateman or
legislator, proposes two distinct objects; first, to provide a plentiful revenue or
subsistence for the people, or more properly to enable them to provide such a revenue
7
or subsistence for themselves... .”
Adam Smith, the acknowledged founder of political economy, considered his interpretation of
8
economic activity superior to other theories because it was based on natural principles. Smith, like
6
Moral philosophy comprised natural theology, ethics, jurisprudence and political economy.
7
Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations. Ed. Kathryn
Sutherland (Oxford: Oxford University Press, 1998), 275.
8
Robert Olson, for example, stated: “Economists, from the early nineteenth to the late
twentieth centuries, have viewed Smith as the initiator and codifier or political economy.”
4
other moral philosophers in the eighteenth and social scientists in the nineteenth centuries, believed
that Isaac Newton’s system of natural philosophy had attained the certainty that science had been
looking for in the modern age. The task left for students of the social world was to replicate what
9
Newton had achieved for the physical world. The background of some social thinkers is indicative of
the strong influence physical science exerted on them: Adolphe Quetelet had come from astronomy to
“social physics.” Henri de Saint-Simon had studied engineering and his first essay dealt with Science
in general. August Comte’s initial project was to create a system of social physics, also pointing to his
intellectual starting point. For Smith, as for other political economists and social thinkers, the
concepts of nature and natural law were central in relation to explanation, causality and reason.
Nature manifested itself individually and collectively in the constancy and regularity of its laws,
which were deemed more fundamental and less arbitrary than laws created and influenced by human
decisions. And nature was not an exclusive attribute of the “natural,” non-human world, but was also
an active constituent element of humans, of society and even of the wealth of nations, as in Adam
Smith’s “Inquiry into the Nature and Causes of the Wealth of Nations.”
Smith did not address the theory or the method of political economy or, more generally, of
moral philosophy in the Wealth of Nations. However, in an earlier essay on “The Principles Which
Lead and Direct Philosophical Enquiries, Illustrated by the History of Astronomy,” he had stated that
“Newton’s system was... ‘the greatest discovery that ever was made by man’... because it stated the
laws of celestial mechanics... [and] the aim and method of all ‘philosophical enquiries’” through the
10
establishment of general laws. Smith’s follower, Jean Baptiste Say, also argued that “the general
Richard Olson, 178.
9
As Scott Gordon reports, Newton himself had foreseen at the end of the Opticks that “if
natural philosophy was perfected by the use of scientific method, benefits could be expected
to follow for moral philosophy as well.” Scott Gordon, History and Philosophy of Social
Science (London: Routledge, 1991), 114).
10
Taken from Scott Gordon, Scottish Enlightenment, 132.
5
facts constituting the sciences of politics and morals, exist independently of all controversy” and that
their consequences “as certainly proceed from the nature of things as the laws of the material
11
world.”
Another source for the certainty and necessity of political economy, besides Newtonian physics, were equally
new interpretations of historical development, beginning with Giambattista Vico’s pioneering “New
Science” (Scienza Nuova) of “what men make.” Vicco proposed history as the proper study of
12
humans in direct opposition to Cartesian mechanism and its project of “mathesis universalis.” David
Hume then brought together the historical and the natural lines of inquiry by proposing to follow
Newton’s “experimental method” to study social phenomena, with history as the counterpart to
13
laboratory experiments for natural phenomena. The Scottish School --to which David Hume and
Adam Smith belonged, together with Frances Hutcheson, Adam Ferguson and others-- also applied
14
the influential stadial theory earlier proposed by the Baron de Montesquieu, to historical science.
Stadial history (also known as conjectural or hypothetical history) described the progression of
humanity through four historical stages based on the economic organization of hunting, shepherding,
15
farming and commercial societies. These stages led inevitably to the culmination of the process in
the “commercial stage” which meant eighteenth century European society, and particularly England,
as Adam Smith showed in the Wealth of Nations. Stadial history also put forth a linearly historicized
16
account of Non-European peoples, squeezing them into categories understandable to Europeans.
What distinguished the Scottish School’s conjectural history from that of other authors was its
rejection of the theories of the state of nature and of the social contract, advanced mainly by Thomas
Hobbes, John Locke, and Jean Jacques Rousseau since, for the Scots, humans had always lived in
11
Say, Treatise ,3. Taken from Charles Hale, Liberalism, 250.
12
Giambattista Vico, Scienza Nuova, . See also Karl Löwith, Meaning in History (Chicago:
University of Chicago Press, 1962).
13
David Hume, “Introduction,” A Treatise of Human Nature: Being An Attempt to Introduce
the Experimental Method of Reasoning into Moral Subjects ( ), . Cited by Scott Gordon,
Scottish Enlightenment, 114.
14
Vico also pioneered the study of history through three ages: “Of Gods,” “Of Heroes” and
“Of Men.” Vico, New Science.
15
For Adam Smith’s view on stadial history see, for example, Gordon Scott, Scottish
Enlightenment, 146.
16
As an example, the Scottish historian William Robertson combined linear history
with Charles Buffon’s theory of degeneration (also followed by other European
Enlightenment authors) to explain the development of peoples outside of Europe, giving rise
to debates where Francisco Javier Clavijero participated for the other side, based on his
knowledge of Aztec and New Spain’s culture. Kathryn Sutherland, “Introduction,” xiv.
6
17
society. Stadial history was also a strong element in the theories of social thinkers in France, such as
18
Aimé Turgot, where it was known as histoire raisonnée. In Germany it had more philosophical
overtones through the work of Johannes Herder, Wilhelm Friedrich Hegel and Karl Marx (later an
exile in England) for whom the immanent logic of history held the key to the future, a conception not
19
too distant from Adam Smith’s.
Adam Smith’s political economy held a particular appeal to enlightened eighteenth and
20
nineteenth century thinkers who believed in the never ending march of progress. Mexico’s Criollo
elites before and after Independence, like readers in other countries, were most interested in part IV of
21
Smith’s Wealth of Nations, “On the Systems of Political Economy.” Smith dealt there with two
previous economic theories, physiocratism and mercantilism, which served as background and
contrast for his “system of natural liberty.” For Smith, physiocratism (the “Agricultural System”) was
22
an ingenious system which existed only in the minds of its creators. More importantly, he proposed
a way out of the system he baptized as “mercantilism” (the “Mercantile System”), and towards the
free enterprise system, characteristic of the early stages of industrial capitalism. Smith, like later
political economists, viewed mercantilism as an earlier phase of economic development, where state
monarchies were the main economic agents in society and trading companies held concessions from
the state. Smith’s description of mercantilism centered on the two “engines for enriching a country”
which made the system work: restraints on importation and encouragements to exportation.
Mercantilism, he surmised, was grounded on the principles that wealth consists of money or of gold
and silver and, second, that a country lacking mines can acquire money or precious metals through
the balance of trade, or by exporting more than it imports. However, Smith objected that creating
prohibitions for a particular industry through monopoly did not encourage domestic industry in
17
See, for example, Scott Gordon, 117-118, 146-147
18
Auguste Comte’s tripartite division of history into the theological, philosophical and
scientific stages closely paralleled Vico’s division. See footnote 14, above.
19
[For comparison of two historical versions of ideology of progress, coming from different
philosophical roots.]
20
Peter Manicas: “It is hardly an exaggeration to say that, without noticeable exception,
nineteenth-century thought was preoccupied with the idea of progress.” Peter Manicas, A
History and Philosophy of the Social Sciences (Oxford: Basil Blackwell, 1987), 52.
21
See, for example, Charles Hale, according to whom Book Four of Smith’s treatise was “the
one that most interested his contemporaries.” Hale, 251.
22
“The system which represents the produce of land as the sole
source of the revenue and wealth of every country has, so far
as I know, never been adopted by any nation, it at present
exists only in the speculations of a few men of great learning
and ingenuity in France.” Adam Smith, Wealth of Nations,
Sutherland, 379. For a recent discussion of physiocratism by a
historian of science and philosophy, see Peter Manicas, “The
Emergence of Political Economy,” A History and Philosophy, 3840.
7
23
general. For him, it was rather individual interest that led to the most advantageous employment of
capital for society. Likewise, Smith opposed protectionism of industries and prohibitions. Instead, in
one of the most often quoted passages of the Wealth of Nations, he stated that the individual, by
supporting domestic industry and directing it to produce the greatest value following his own interest,
24
is “led by an invisible hand to promote an end which was no part of his intention.” Thus, for Smith,
the individual´s judgment was better than that of the statesman.
A particular incentive to achieve a positive balance of trade under mercantilism was, for
Smith, establishing colonies in distant countries whereby... “a monopoly was frequently procured for
25
the goods and merchants of the country that established them.” His prime example were “the first
regulations” made by England for its colonies in America, which “had always in view to secure to
herself the monopoly of their commerce, to confine their market and to enlarge her own at their
expence, and consequently, rather to damp and discourage, than to quicken and forward the course of
26
their prosperity.” This formulation by Smith of the metropolis-colony relation antecedes the
“Colonial Pact” model, also based on England´s relation with its thirteen colonies in North America,
but not as relevant to New Spain, as we saw in chapter 2. Smith criticized Spain and Portugal, some
of whose colonies had precious metal mines, as a special case under mercantilism. Gold and silver
were “naturally” cheaper in the two countries, and more so by the restrictions on exportation. But the
effect, for Smith, was to discourage the domestic agriculture and manufactures of both Spain and
Portugal.
Smith’s criticism of England’s prohibitionist measures for its colonies in America was more
severe: “to prohibit a great people, however, to make what they can of every part of their own
produce, or from employing their stock and industry in the way that they judge most advantageous to
27
themselves, is a manifest violation of the most sacred rights of mankind.” Smith was a fierce critic
of colonialism, who apparently felt no conflict between his role of political economist as an impartial
and detached observer, and his “enlightened” opposition to “Barbarian” and unjust practices [role of
ethics for Smith]. For him, European policies had contributed very little to the prosperity of colonies
in America. Their establishment had been guided by “folly and injustice”... “the folly of hunting after
gold and silver mines, and the injustice of coveting the possessions of a country whose harmless
natives, far from having ever injured the people of Europe, had received the first adventurers with
28
every mark of kindness and hospitality.”
In the concluding remarks to the Wealth of Nations, Smith mocked the “rulers of Great
Britain,” who “for more than a century... amused the people with the imagination that they possessed
a great empire on the west side of the Atlantic.” His reason was that the empire, in fact, was of no
23
Sutherland, 286.
24
Sutherland, 292.
25
Sutherland, 286-287. [Canaan edition?]
26
Smith Wealth, Sutherland, 351-352.
27
As we saw in Chapter 2, Alexander von Humboldt raised similar objections to Spain’s
policies towards manufactures in New Spain, in more subdued tones, in his Political Essay
on the Kingdom of New Spain. Smith, Wealth, (Sutherland, 346).
28
Wealth, 350.
8
benefit for the majority of the people in England but only for a small minority: merchants. And he
29
referred elsewhere to Spain and Portugal, as “those two beggarly countries.” No doubt, statements
such as these would give fuel to the Criollo elites who were arguing for free trade and for
Independence in Mexico since the end of the colonial period, where Smith was available through
30
French and Spanish translation. After Independence, his critique of mercantilist practices of
protectionism and prohibition were appropriated by free traders in the debates against national
industry advocates. But pragmatists advanced these practices in the debates not on mercantilist
premises but rather as part of an emerging industrial protectionism. This “neo-mercantilism” eluded
free traders but became an extended practice in industrializing countries in the nineteenth and
31
twentieth centuries.
I will examine next the analysis of Smith’s critique of mercantilism, leading to his system of
“natural liberty,” by the historians Gordon Scott, Richard Olson and Robert Heilbroner who, working
from slightly different perspectives centered on the history of science and philosophy or of ideas,
32
showed remarkable agreement with Smith’s critique. Olson and Heilbroner also emphasized how
nineteenth century followers appropriated Smith’s ideas in a pragmatic way stretching laissez faire in
ways he did not contemplate. [Mexico]These discussions are part of the massive literature on the role
of the state in economic development, including historical interpretations of the “industrial
revolution.” For Scott Gordon, historian and philosopher of social science, Adam Smith’s concept of
the “invisible hand” is simply the idea that there are governing laws controlling economic processes
as there are laws governing natural processes. Gordon’s naturalistic interpretation of the “invisible
hand” is part of a controversy which I will not enter here. More pertinent to our discussion is Smith’s
confidence in the better knowledge of the individual than of the statesman, and Smith’s optimism in
33
the final outcome of economic processes. These assumptions, which may now seem very naïve to
29
Wealth, 464, 357.
30
See Germain Garnier, Recherches sur la nature et les causes
de la richesse des nations, par Adam Smith; traduction
nouvelle, avec des notes et observations (Paris: de
l’Imprimerie de H. Agasse, 1801); For Smith’s influence at the end of the
colonial period, see also Elí de Gortari, La ciencia, 241; Enciclopedia de México, s.v.
“Economía.”
31
Henry G. Aubrey, “Deliberate Industrialization,” Social Research 19 (1949), 158-182,
presented a case study based on Mexico --and including Japan, the industrial countries of
western Europe and the United States-- on the role of government in assisting and initiating
the first steps towards industrialization between 1775 and 1850.
32
Peter Manicas, who studied “the emergence of political economy as the science which we
now call economics,” found “the indictment of mercantilism in Book IV” as “merely of
historical interest,” if one reads the Wealth of Nations “from the point of view of subsequent
development,” where Smith comes out as “analytically confused.” But, Manicas notes,
“Smith conceived his project holistically and as substantially practical, not analytic.” Peter
Manicas, The Emergence, 48, 49.
33
I will just note the clearly providentialist expression of the “invisible hand” concept in
Smith’s Theory of Moral Sentiments:“When Providence divided the earth among a few
9
us, were central in the arguments of Mexican free traders as we saw in Chapter 4. Gordon further
argued that Smith was not opposed to government intervention in principle and that there are many
passages where he calls for it. Instead of offering specific examples, Gordon asserted: “If one reads
the Wealth of Nations and notes down every occasion on which Smith calls for government action, a
34
long agenda of state economic functions will be compiled by the time one reaches the end.” For
Gordon, Smith was against mercantilism, then, not simply because it was a system of economic
intervention, but because of its misguided objectives and faulty scientific foundations. As evidence,
Gordon offered the comment that “Anyone who has looked at the economic regulations of the
eighteenth century can hardly fail to conclude that Smith was right.” For Gordon these regulations
were pervasive, lacked a “defensive or even coherent, rationale” and were administered by an
inefficient and corrupt government bureaucracy. But the main point of Gordon’s criticism was the
foundation of Smith’s advice on “observation and analysis,” not on “dogmatic laissez-faire”
35
principles.
Richard Olson, another recent historian and philosopher of science, centered on the
conclusion to Book IV of the Wealth of Nations, where Smith dismissed the mercantile and the
agricultural systems and exalted his own system of “natural liberty”: “every man, as long as he does
36
not violate the laws of justice is left perfectly free to pursue his own interest in his own way.”
According to Olson, Smith’s work systematized and synthesized liberal economic ideas which were
on the ascent in eighteenth century England. Smith offered upward mobility to the “laboring and
minor artisanal classes,” security in their wealth and power to the wealthy landowning class, and “the
freedom of unregulated economic manoeuvering” and a central role in economic growth to
entrepreneurs and merchants. Olson detected a pragmatic streak in Smith’s remark that “To expect,
indeed, that the freedom of trade should ever be entirely restored in Great Britain, is as absurd as to
expect that an Oceana or Utopia should ever be established in it.” The main obstacles were, for Smith,
37
the “prejudices of the public and the “private interests of many individuals.” But Smith himself was
Lordly masters, it never forgot nor abandoned those who seemed to have been left out of the
partition. The rich... in spite of their natural selfisheness and rapacity... are led as by an
invisible hand to make nearly the same distribution of the necessaries of life, which would
have been made, had the earth been divided into equal portions.” Adam Smith, Theory of
Moral Sentiments. 6th Edition (1790), 184-185. Taken from Richard Olson, Fused Sciences,
169.
34
One such instance is Smith’s suggestion, in Book V of the Wealth of Nations, that
temporary monopolies should be allowed in the case of “companies of merchants,” organized
as joint stock companies, as “the easiest and most natural way in which the state can
recompense them for hazarding a hazardous and expensive experiment” which would benefit
the public. Likewise, Smith asserted, “without a monopoly, however, a joint stock company,
it would appear from experience, cannot long carry on any branch of foreign trade.” Smith,
Wealth of Nations, 418-419. Gordon, Scottish Enlightenment, 145.
35
Gordon, Scottish Enlightenment, 130-146
36
Adam Smith’s quote is from Wealth of Nations, 391. Richard Olson, The Emergence of the
Social Sciences, 1642-1792 (New York: Twayne Publishers, 1993), 173-178.
37
Richard Olson, The Emergence, 178.
10
interpreted in even more pragmatic ways. As Olson remarks, Smith’s “deep pragmatic streak helped
to cushion the shock that many of his recommendations might have given to certain special interests.
It was thus possible to accept his general arguments without giving in on any of his specific
38
discomforting policy advice.”
Robert Heilbroner, approaching Smith from the history of economic ideas, connected the
issues of mercantilism and government intervention to Smith’s main theories. Smith, Heilbroner
argued, led by his optimistic vision, saw no conflict between the interests of individual economic
agents and the interests of society as a whole, since the interaction of private interests through
competition leads to social harmony. The market, where economic agents operate, is self regulating
through the laws of supply and demand. Heilbroner, like Scott, stated that government intervention
had a place in Smith’s system, recalling the three main tasks Smith assigned to government in Book
5: protection from foreign threats, administration of justice, and public works, including roads and
education. But, unlike Scott and Olson, Heilbroner did not referred to Smith’s critique of
mercantilism not directly but speaking instead of monopoly as Smith’s “greatest enemy.” Heilbroner
argued that Smith was against “the meddling of the government with the market mechanism,” through
“restraints on imports and bounties on exports,” through “laws that sheltered industry from
competition” and through “government spending for unproductive ends.” Heilbroner also noted that
Smith’s opposition to government intervention was later used to oppose humanitarian legislation for
industry, a version of laissez faire not contemplated by Smith. For Heilbroner, “Smith was the
economist of pre-industrial capitalism” who did not foresee the threat to the market system by
“enormous enterprises” or how his “laws of accumulation and population” would be upset by
sociological developments later. And he did not foresee the Industrial Revolution either. But,
39
Heilbroner concluded, “the great panorama of the market remains as a major achievement.”
[comment on historians]
Free traders in Mexico were certainly convinced of the scientific basis of Smith’s analysis
and were imbued by his optimism. But a closer examination of the role governmental intervention
played for Smith might suggest that they were more doctrinaire than their master in their arguments
for free trade and against protectionism. Perhaps an important difference to keep in mind, particularly
in the debates, is that their role was not purely academic but was part of political struggles and had a
direct impact on economic policies.
Spain’s Colonial Policies and Political Economy, 1750- 1810
During the Habsburg period (1543-1700), scholars claim, what can be considered the
“political economy” of the Spanish Empire --as the “science of the statesman” in Adam Smith’s
definition [Prescription for action as the science of the statesman]-- was scattered in many individual
and often contradictory laws, edicts, royal letters patent (cédulas reales) and orders, which were
38
39
Olson, Fused Sciences, 177-178.
[For similar claims about Smith’s “pre-industrialism” by Charles Hale and Maxine Berg,
see] Robert Heilbroner, The Worldly Philosophers, 68-72. Kathryn Sutherland related Smith
to more recent debates: “his experience as an eighteenth century citizen was of pre-industrial
small scale technology. He does not anticipate the high-technology, multinational interests of
modern institutions, the dangerous consumption of non-renewable natural resources, or the
problems of post-industrial development.” Kathryn Sutherland, “Introduction,” Wealth of
Nations, ix.
11
40
compiled in the Laws of the Indies. Policies towards New Spain’s textile and other manufactures
arguably operated in the same way as in any other kingdom of the Spanish Empire. Since very early
after the conquest, ordinances were issued in the sixteenth century for the establishment of New
Spain’s silk guilds and wool obrajes, based on materials and institutions of European origin, while
41
native cotton textiles were demanded as tribute to the Spanish conquerors and to the King. Some
metropolitan manufactures were sent to the colony through the anemic fleet system, which was
limited by the relation between the cost and weight of goods, and no particular restrictions or
encouragements were provided for colonial manufactures. Trade among colonies was not allowed,
[under the monopoly of Seville and later also of Cadiz]. However, unlike the Habsburg period,
Bourbon officials undertook to reform industrial and trade policies towards colonies in the eighteenth
century, based on a more and coherent set of principles and on changing political economy ideas in
Spain. Comercio libre, the most important economic policy introduced by Bourbon reformers, aimed
at liberalizing trade while also strengthening the role of the metropolis as a manufacture producer and
42
of colonies as raw material producers, following mercantilist principles.
Some relevant economic thinkers for Bourbon economic reforms were also public officials, including
José Campillo y Cossío Minister of Finances and of War in Philip V’s reign (1700-1746). Under
Charles III’s rule (1759-1788), when comercio libre was established, Bernardo Ward was Minister of
the Board of Trade and Mint, and Pedro Rodríguez Count of Campomanes was Councilor of the
Treasury and of Castile. Pedro Pablo Abarca de Bolea, Count of Aranda, was President of the Council
43
of Castile, and was later First Minister of State under Charles IV (1788-1808). These economists,
40
See Las leyes de Indias con las posteriores a este código vigentes hoy y un epilogo sobre
las reformas legislativas ultramarinas por Don Miguel de la Guardia (Madrid,
Establecimiento Tipográfico de P. Núñez, 1889-90); Francisco López Pozo, Las leyes de
Indias (Córdoba: Publicaciones Obra Social y Cultural Cajasur, 1995); John L. Phelan,
“From Kingdoms to Empire: the Political Innovations of Charles III,” The People and the
King: The Comunero Revolution in Colombia, 1781 (Madison: University of Madison Press,
1781), 3; Francisco R. Calderón, Historia económica de la Nueva España en tiempo de los
Austrias (Mexico: Fondo de Cultura Económica, 1988), 138-140.
41
There was a type of mulberry bush in New Spain but silk worms were introduced from
Spain after the conquest for the production of textiles. See Chapter 1, above.
42
Comercio libre aimed at liberalizing trade by breaking the monopoly of the cities of Seville
and Cadiz, and allowing limited trade for colonies among themselves, while establishing
protectionist measures for Spain’s fledgling manufactures, as we saw in Chapter 2.
43
Pedro Rodríguez Campomanes, José Moniño, Count of Floridablanca, First
Minister of State (1776), Pedro Pablo Abarca de Bolea, Count of
Aranda, and Gaspar Melchor de Jovellanos, Minister of Justice (1797, under Charles IV),
praised as “enlightened reformers” by the historian Elí de
Gortari, were other influential ministers and economic advisors in Charles III’s
and IV’s courts, more closely related to internal reforms in
Spain. Aranda was the author of a Reform Project published in
1783. Campomanes was interested in revitalizing manufacturing
and “always assumed a large role for the state,” according to
Hale. Campomanes and Jovellanos were also leaders of economic societies, who opposed
12
influenced by the French Enlightenment, criticized Habsburg restrictions to colonial economic
44
activity and advocated a compromise by partially opening trade under control by Spain. French
influence was strengthened by Philip V’s accession to the Spanish throne in 1700, inaugurating the
Bourbon dinasty. Philip V was interested in renewing the Spanish economy following the advice of
his grandfather, King Louis XIV of France who sent Jean Orry (1652-1719), Jean Baptiste Colbert’s
disciple, to serve as an advisor to Philip V. Orry began a project of financial and administrative
45
reforms based on the French Model.
Two other precursors of Bourbon economic reforms, Jerónimo de Ustáriz and Bernardo de
Ulloa, had quite similar criticisms and recommendations on imperial policies. Ustáriz, who published
his Teórica y práctica de comercio y marina in 1724, criticized the “excessive” Habsburg taxation
system for leading to the decline of economic development in Spain by promoting contraband.
Ustáriz advised the reduction of duties to make Spanish goods cheaper than foreign goods, and the
encouragement of sea trade by building warships capable of transporting cargo. He also advised the
Crown to encourage entrepreneurs, particularly merchants and textile manufacturers, and to promote
46
the trade of Spanish goods, especially of textiles. Bernardo de Ulloa, in his Restablecimiento de las
fábricas y comercio español, published in 1734, proposed the reduction of taxes to stimulate trade
with the colonies and to redevelop textile industry, the most important economic activity in Spain
after agriculture. Ulloa also proposed that goods for the Indies be carried in Spanish vessels to
revitalize the fleet system. He blamed the decline of Spanish trade on Habsburg kings and saw the
French and British Antilles as a threat to Spain's hegemony in the New World. Ulloa also proposed
the expulsion of English and French foreigners from the [Spanish] Antilles, to counter the increase of
47
smuggling taking place after the Treaties of Utrecht (1713-1715).
José Campillo y Cossío is deemed by scholars the most important economic thinker before
Charles III’s reign. His Nuevo sistema de gobierno económico para la América, written in 1743 and
published in 1789, was the key to understand Bourbon reforms for the historian Masae Sugawara.
Campillo’s proposals centered on industrializing Spain, liberalizing trade, and reorganizing colonial
administration. He proposed to exploit the natural resources of the colonies and to assure a share in
the colonial trade for Spanish subjects and products. Campillo thought that “Spain’s greatest good can
be produced by its extremely vast territorial possessions [dominios] in America... which can consume
our fruits and goods.” Interestingly, and contrary to traditional interpretations of “Spanish
mercantilism,” Campillo supported fostering in the colonies “all those factories or arts whose
guild restrictions and advocated secular education. See Elí de Gortari, La ciencia, 236; De
Gortari, 237; Charles Hale, 251-252. John Leiby, Colonial Bureaucrats, 161.
44
Elí de Gortari, ibid; John Leiby, Colonial Bureaucrats, 17-18; Masae Sugawara, Reformas
borbónicas, 17-20;
45
Louis XIV also recommended to Philip V the study of political economy at Spanish
Universities. John Leiby, 1-3, 159; William F. Wertz and Cruz del Carmen Moreno de Cota, “La
España de Carlos III y el Sistema Americano: Las políticas económicas leibnizianas de Carlos
III.”http://www.schillerinstitute.org/newspanish/InstitutoSchiller/Literatura/Sinarquismo/CarlosIII/02
-politic_eco_leibniz.html, accessed, June 1, 2006
46
John Leiby, 3-4, 159.
47
John Leiby, 4-5, 159-160.
13
procedures (maniobras) must come from foreign countries. I do not and cannot find any reason which
would direct us inexorably (irremisiblemente) to prohibit them in the Indies.” Campillo saw trade as
“the main foundation of all other interests of the monarchy, since it gives life to agriculture, the arts,
factories and manufactures of industry... we must look at freedom as the soul of trade, without which
it cannot flourish or live.” Campillo enunciated the basic principles of comercio libre as a means to
expand trade between Spain and its colonies, by lowering taxes to decrease contraband; adopting a
48
regular mail service; curtailing or abolishing the Cadiz monopoly, and ending the fleet system.
Next, under Charles III, Bernardo Ward published his Proyecto Económico in 1762, which
for Elí de Gortari contained the antecedents of comercio libre. However, John Leiby saw Ward as
José Campillo’s follower, who convinced Charles III of the validity of Campillo's ideas. Likewise, for
John Phelan, Campillo’s Nuevo sistema was published with minor alterations in... Ward’s Proyecto
Económico.” Ward proposed a relaxation of Spanish commercial restrictions and suggested to open
49
more Spanish ports to trade with the Indies. What finally seems to have convinced the Spanish
Crown of the urgency of changes was not ideas but the occupation of Havana by England in 1762,
during the Seven Years’ War. Trade increased greatly, from five or six ship arrivals per year before
and 30,000 pesos collected in duties, to more than 300 hundred ships and 400,000 pesos in duties.
This increase prompted Charles III to create a Technical Board (Junta Técnica), which studied
50
colonial trade. The main problem the Junta found, apart from the monopoly of the Cadiz Consulado
and the limited number of licensed ships under the fleet system, were excessive commercial duties
which stimulated contraband activities. Consequently, the Junta recommended suppressing the Cadiz
monopoly and opening trade to all of Spain’s provinces through twelve seaports, and to thirty five
seaports in the Indies. The Junta also proposed abolishing the fleet system, introducing ad valorem
commercial duties and granting preferential treatment to Spanish goods. But, significantly, the
[Reglamento para el comercio libre of October 12, 1778] royal document establishing “free and
protected trade between European and American Spaniards” (comercio libre y protegido entre
españoles europeos y americanos) allowed sending up to two thirds of foreign goods of “legal trade”
in each shipment. Earlier, as part of the Treaty of Utrecht (1713), England had won the right to a trade
contract with the Spanish Crown (derecho de asiento), whereby it could send a ship with goods,
mostly slaves, to Spain’s American colonies each year. Comercio libre was broken by the greater
51
naval and merchant strength of other European powers.
48
Masae Sugawara, Reformas borbónicas, 18-19; John Phelan, From Kingdoms to Empire, 34; John Leiby, Colonial Bureaucrats, 5-6, 160-161.
49
De Gortari, La ciencia, 236; Leiby, Colonial Bureaucrats, 6-7, 160161; John Phelan, From Kingdoms to Empire, 3.
50
John Phelan, From Kingdoms, 4; Five experts in commerce and industry integrated the
Junta, according to Leiby: the Marqués de las Llamas, José Moziño y Ortega, Francisco
Craywinkel, Simón de Aragori, Pedro Goozens and Tomás de Landaquiri. Leiby, .
51
Leiby, Colonial Bureaucrats, 9. For “Comercio libre y protegido” as defined by the Crown,
see John Fisher, “Imperial Free Trade and the Hispanic Economy, 1778-1796,” Journal of
Latin American Studies 13 (1981), 21-56; Florescano and Gil, Reformas borbónicas, 225.
See also Luis Chávez Orozco, Historia del Comercio Exterior de México (Mexico: Instituto
Mexicano del Comercio Exterior), 1967; Abel Juárez Martínez, “Repercusiones del libre
cambio en España y Nueva España,” España y Nueva España: sus acciones transmarítimas
(Mexico: Universidad Iberoamericana, 1991), 121.
14
After comercio libre was established Gaspar Melchor de Jovellanos and Alvaro Florez
Estrada, whom Charles Hale identified as “doctrinaire economists,” were among Adam Smith’s early
followers in Spain. For Hale, Jovellanos was “the most outspoken of the early economic liberals in
Spain, while Florez Estrada was the “first systematic liberal theorist in Spain.” Jovellanos identified
Spain’s “natural economy” with agriculture and, like Smith, opposed the privileges of merchants and
52
manufacturers. However, his Informe de Ley Agraria of 1795 led to royal disfavor. Flórez Estrada,
whose Curso de economía política was published in 1828, had also published two pamphlets in 1811
and 1818. Influenced by Adam Smith, Florez Estrada supported changes brought about by comercio
libre, arguing that between 1778 and 1800 trade with the colonies had increased 500 percent, and
53
proposed the adoption of “total” free trade by Spain "on the British model." However, not everyone
agreed with outright free trade. The president of the Cortes of Cadiz, Ramón Lázaro de Dou, who
called Smith “the Newton of political economy,” espoused “high tariffs for industry in his native
Catalonia,” Dou was apparently following economic reform trends current in Spain since the late
eighteenth century, which emphasized both industrial development (fomento) and the freeing of
54
trade.
The Spanish Translation of Political Economy
The Spanish translators of Adam Smith and of his follower Jean Baptiste Say were themselves
political economy authors, who help us understand the different ways in which political economy was
appropriated in the Spanish Empire, in close relation to the economic and political debates of the
time. For instance, the translator of Adam Smith’s Wealth of Nations, Josef de Alonso, was not afraid
to state his disagreements with Smith´s text, following the mercantilist tendencies in the Spanish
economy. Book IV, “Of Systems of Political Economy,” was particularly troublesome since Smith
referred to Spain and Portugal as prime (and sole) examples of the “Commercial or Mercantile
System,” of which he was highly critical. De Alonso noted in his “Preface” that he had added notes or
appendices in places where Smith dealt with things not supported by the “classical authors” of the
[Spanish] Kingdom, “suppressing a few, very few particulars, because they were absolutely
impertinent to our nation or little in agreement with the holy [Catholic] Religion that we profess.”
Likewise, in a note to page 52 (in the second volume of the translation) de Alonso referred to the
52
Like Campomanes and Floridablanca, Jovellanos wrote no specific works related to Spain’s
American colonies. Hale, Mexican Liberalism, 252-253.
53
Leiby, 162-163; Hale, 252-53.
54
Hale, 252.
15
damage that foreign manufactures would cause to “our factories, because they are not yet in a state of
competition with foreign ones. It is still necessary to restrict their introduction and to contain the
export of metals for their purchase.” Charles Hale commented: “The first Spanish edition (1794) of
Adam Smith’s Wealth of Nations was put through a mercantilist sieve by translator José Alonso
55
Ortiz, and it emerged mutilated, abridged and full of qualifying footnotes.”
55
Adam Smith, Investigación sobre la naturaleza y las causas de la riqueza de las naciones,
traducido por Joseph de Alonso Ortiz, con varias notas e ilustraciones relacionadas a
España.” First Edition 1794 (Madrid: 1894), 517; Charles Hale, Mexican Liberalism, 253.
Likewise, Carlos Martínez de Irujo, who translated Condorcet´s synthesis of the Wealth of Nations as
Compendio de la riqueza de las naciones, complained in his “Preface” that the improper applications
Adam Smith tried to make of his theories “could deprive us of the treasures that it contains.” But,
Martínez observed, “the compendium that we offer has all the advantages, without these
56
inconveniences.” Interestingly, Manuel María Gutiérrez, who translated Jean Baptiste Say´s Traité
d´Economie Politique (first published in Madrid in 1803), opposed the views of de Alonso and
Martínez. In the “Prologue” to the Treatise, Gutiérrez asserted that government efforts to change the
course of industry were useless and harmful and that the balance of trade based on currency and
57
precious metals was a mistake. Thus, Smith’s (and Say’s) translations can be best understood in the
context of the two main currents of thought on political economy in Spain, coming from comercio
libre and Adam Smith’s free trade. A similar tension (mutatis mutandis) was later felt in Independent
Mexico, where political economy was openly questioned as to its scientific value.
Likewise, the appropriation of Say’s Treatise in Mexico, and beyond, shows other reasons for
audiences’ choices of political economy authors. Historians claim that Say, as a systematizer and
simplifier of Adam Smith, was possibly more popular than Smith in Mexico, where the Treatise had
been available since the end of the colonial period. Likewise, Charles Hale claimed that Say “was
58
more translated and apparently more read in Hispanic countries than was his master.” An additional
reason for this preference was, for Hale, Say’s portrayal of the economist as “a detached observer, an
59
analyst, a scientist.” For Clement C. Biddle, Say’s translator into English, the Treatise appealed to
liberal thinkers because Say emphasized more than Smith the separation between politics and
economics. In support, Biddle quoted Say’s assertion that “wealth... is essentially different from
political organization.” The fact that Say was French might also be a factor for Say’s greater
acceptance in Europe. After enumerating the Treatise’s translations into German, Spanish, Italian and
“other languages,” Biddle, stated: “it has been adopted as a text-book in all the universities of the
60
continent of Europe.” In Mexico, José María Luis Mora used Say’s Treatise as the textbook for the
first course on political economy, which he taught at the Colegio de San Ildefonso in 1822. Say could
also appeal to protectionists. Referring both to the “exclusive and restrictive system” and to “new
communities,” Say had observed that “the soundest principles are not at all times applicable. The
61
essential object is to know them, and then such as are applicable or desirable can be adopted.”
[move as larger topic sentence?] More generally, it can be argued that the principles of free trade,
advocated by both Smith and Say (and other classical political economists), existed in a pure form
only in theory and not in practice, including the bookish science of their followers who often argued
from authority.
56
Compendio de la obra inglesa intitulada Riqueza de las naciones hecho por el marqués de
Condorcet y traducido al castellano con varias adiciones del original, por don Carlos
Martínez de Irujo. Madrid: La Imprenta Real, 1803, X.
57
Jean Baptiste Say, Tratado de economía política, o exposición sencilla del modo con que se
forman, se distribuyen y se consumen las riquezas (Madrid : Imprenta de Collado, 1816), .
Charles Hale observed that Say´s Treatise was fully translated and had several editions in
Spain. There was another edition of the Treatise in Mexico in 1814, with a prologue by an
author who advocated the study of political economy. Charles Hale, 252. See also
Enciclopedia de México, s.v. “Economía.”
58
Charles Hale, Liberalism, 250.
59
Say, Treatise, 3; taken from Hale, Liberalism, 250.
60
Clement C. Biddle, Advertisement,” A Treatise On Political Economy; or the Production,
Distribution and Consumption of Wealth. (Philadelphia: John Grigg, no. 9, North Fourth
Street, 1827), ix.
61
Jean Baptiste Say, “Introduction,” A Treatise on Political Economy, liii.
17
Another important influence on the development of free trade thinking in Mexico, besides comercio
libre and free trade theories, were the effects of Bourbon economic reforms taking place in the second
half of the eighteenth century. Some reforms, like the creation of intendencias which took away
repartimientos from alcaldes mayores, were not welcome by the Criollo elite in New Spain for whom
62
they had negative economic implications. John Lynch argued that the change to the intendencia
system made Criollos wish for Independence as a means to recover control of [Indigenous] labor.
Other impopular economic measures in the colony were tax increases at the end of the eighteenth
century and the application of the Law of Consolidation in 1804, which was a means for the Crown to
reclaim Church property, most of which was loaned by private entrepreneurs for economic activities.
63
After being in effect for four years, it was suspended by Viceroy Iturrigaray in 1808.
On the positive side, comercio libre policies were closely tied to political economy as a
modernization agent. Comercio libre set things in motion by abolishing the fleet system, breaking the
duopoly of Sevilla and Cadiz, and allowing colonies to trade among themselves [and with foreigners].
As John Lynch argued for Argentina, Criollos in late New Spain wished for “economic emancipation
before political emancipation,” through free trade. And, following Florescano and Gil, as a result of
trade changes Criollos adopted free trade ideas as a political weapon against Peninsulares, including
the opposition by small and medium provincial merchants against the powerful Mexico City
Consulado, between 1770 and 1800. Next, between 1800 and 1821, Criollos became identified with
64
free trade and “gachupines” (a despective term for Spaniards) with monopoly and protectionism.
Thus, changes in economic practices were part of the transition from colony to nation, as were
changes in economic thinking.
Writings by New Spain’s enlightened elite expressed several concerns around freedom of trade at the
end of the colonial period: disappointment that comercio libre had not brought about expected
changes and that monopoly and smuggling continued; complaints that current economic policies were
damaging for the colonies and also for Spain. One central question for authors was whether free trade
should benefit Spain or New Spain (or both), depending on how they viewed Spain’s role as a
colonial power. For some, like viceroy Juan Vicente Revillagigedo, José María de Quirós and Bishop
Manuel Abad y Queipo, Spain had developed New Spain to the point that it was now stronger than
the metropolis. Thus, they insisted, New Spain’s free trade was a benefit for Spain, similarly to the
liberal project of the Cortes of Cadiz, which supported greater economic freedom for the colonies but
65
opposed their independence. On the opposite side, the Independence movement leader Fray
62
Intendencias were part of the political reforms introduced in New Spain to concentrate
administration on Spanish officials, instead of Criollos, and to eliminate repartimientos. See
Chapter 2, above.
63
See, for example, Charles Hale, 137-138. Scholars argue that economic reforms worked for
the Spanish empire, at the political cost of losing the colonies. Pedro Pérez Herrero,
Reformas borbónicas, 150; John Lynch, The Spanish American Revolutions 1808-1826
(New York: W. W. Norton, 1973), 11-15. See also Chapter 2, above.
64
Lynch, Spanish American Revolutions, 50. Enrique Florescano, Isabel Gil Sánchez, 225;
“La época de las reformas borbónicas y el crecimiento económico,” Historia general de
México. Comp. Daniel Cosío Villegas. (México: El Colegio de México, 1977), 487-519,
578-589.
65
For the Cortes of Cadiz see, for example, Hira de Gortari Rabiela, 8-10.
18
Servando y Teresa de Mier argued that Spain had constantly oppressed the colonies and hindered
their development, and saw free trade as a possible way to benefit New Spain instead of Spain.
Additionally, documents circulating between the end of the War of Independence and the beginning
of Independence (in 1820 and 1821) reveal a shift towards the interests and internal conditions of the
colony, rather than of the metropolis, including the situation of domestic manufacturers. A Petition
(Representación) against the Veracruz Consulado (date), signed by some of the city’s members
argued for free trade as a benefit for New Spain and against the Consulado institution. By contrast, a
letter from Puebla, signed by “The True Patriot,” denounced the social effects of free trade on
domestic industry, anticipating arguments brought forth later by protectionists in the free trade
debates in Congress. And, right around the time Mexico was becoming Independent, a pamphlet from
1821 signed by “Filalethes,” (the “Lover of Truth”) also from Puebla, opposed the creation of a
Consulado there and supported domestic manufactures without opposing free trade.
I will begin by briefly mentioning viceroy Revillagigedo’s Report on the State of Trade in
New Spain in 1793, both attacking monopolies and their supporters, and demanding that New Spain’s
economy support the Spanish empire instead of Criollo elites, consistent with the goals of Bourbon
66
economic reforms. José María de Quirós and Bishop Manuel Abad y Queipo also emphasized the
advantages free trade represented for Spain. Quirós, a member of the Veracruz Consulado, argued
that commercial, industrial and agricultural activities had increased in Mexico as a result of comercio
libre policies. Therefore, he advocated free trade for the development of Spain and Spanish America,
instead of restrained trade which was damaging Spain’s economy as an incentive for the sale of
67
smuggled goods to Spanish-American merchants by foreigners, particularly the British. Close to
Quirós’s position, the merchant Vicente Basadre wrote an article in 1807, where he attacked the
Crown for its restraints on "free trade," observing that contraband was encouraged by the actions of
the Spanish government. Basadre called on the government to relax all trade restrictions, and
maintained the need to expand Spain’s textile industry and to create academies for the education of
68
merchants. Likewise, Bishop Abad y Queipo --whose Memorias were published by José María Luis
Mora, the post-Independence liberal leader, because of the importance he attributed to them-- thought
that the best way for Spain to keep its colonies was to introduce fiscal reforms together with
improvements in production, in order to widen the colonies’ [economic] basis instead of draining
them. Queipo also argued for allowing trade among colonies and for fostering their textile industry,
not only of coarse goods but also of finer textiles, which Spain was unable to supply, to stop the
69
colonies' resources from going to foreigners.
66
Leiby, 166. For Revillagigedo’s and later viceroys’ attitudes towards colonial manufactures
see chapter 2, above.
67
José María de Quirós, Reflections on the Free Trade of the
Americas (1817); Controversia que suscitó el comercio de la Nueva España con los
países extranjeros (1811-1821); Leiby, 8, 170-172; Enciclopedia de México, s.v.
“Economía.”
68
Basadre’s article appeared in the Gaceta de México, published by Antonio Valdés since
1788, which included articles on the economy, as did the Diario de México in the nineteenth
century. See Leiby, 168-170.
69
Hira de Gortari Rabiela, Las ideas sobre la economia novohispana, 1821-1824 (Mexico: El
Colegio de Mexico, 1972), 1- 11; Charles Hale, 135-138;
19
Unlike Quirós, Basadre and Abad y Queipo (among others) who supported economic reform
for New Spain as part of the Spanish empire, Fray Servando y Teresa de Mier promoted the
independence of American colonies which, he thought, were greater and more prosperous than
70
Spain. Following Alvaro Flórez Estrada, Mier argued that Spain had become dependent on its
colonies' wealth and had not allowed them to cultivate certain fruits, install factories, or trade among
themselves, as a way to protect Spanish products. Mier pointed out that the trade monopoly held by
the cities of Sevilla and Cadiz had resulted in contraband. Foreigners sold directly to colonies instead
of to Spain and Spanish producers were being ruined. And Spain, pursuing one-sided policies for its
benefit, depended on manufactures from other European countries and on American resources to
71
acquire them.
Among authors writing at the end of the “old regime,” an 1820 Petition (Representación) by
the city of Veracruz citizens argued for free trade, opposing a previous petition presented by the
72
Cadiz and the Veracruz Consulados. The petition criticized the royal Consolidation decree of 1804,
which affected “pious funds” of the Church, but also damaged trade and agriculture. But the petition
sided with the Crown against the uprising of 1810, which began the War of Independence and turned
New Spain into a “mansion of horror, damaging all branches of economic activity, ruining individuals
73
and also depriving the government of resources.”
The petition also argued from recent history and from political economy for the need of New Spain’s
free trade with nations other than Spain. The twelve year war with England [since 1796, following the
war with France after the execution of Louis XVI in 1793] and the “Barbarian” aggression
[Napoleon’s invasion of Spain in 1808], the petition condidered, had caused Spain to lose its
agricultural and industrial resources. The “glorious restauration” from Charles III’s reign had
disappeared and it was necessary to recognize the need to change the system. The metropolis was
unable to provide for “its Americas” without resorting to foreign markets. Thus, the petition argued
for production in the colonies as a benefit to Spain: “If the Americas produce, their consumption will
increase, there will be greater exchanges and the [Spanish] peninsula will receive the double benefit
of fostering its agriculture and enlivening its foreign trade.”
Arguing from political economy, the petition deemed free trade “the most important political
question since the discovery of the New World.” Free trade had surfaced in Charles I’s times and was
taken up again in Charles III’s reign, but was “drowned in its cradle by concern, ignorance and
monopoly.” But at present, the century’s enlightenment, along with healthy philosophy and the true
interests of the Spanish people were making [free trade] rise again from its ashes. This was, for the
petition, the nation’s cause against whose rights [the Consulados’] guild interests fought; “freedom
70
Hira de Gortari, 12-18; Enciclopedia de México, s.v. “Economía.”
71
For similar economic arguments for independence in 1821 see Hira de Gortari Rabiela, 2123.
72
Representación, 6. The Bethanite priest Antonio de San José Muro expressed similar
concerns that comercio libre reinforced the monopoly of the city of Veracruz Consulado, and
advocated the establishment of regional trade fairs in the cities of Jalapa and Orizaba as a
means to reduce the Consulado’s power. Leiby, 7.
73
The signatories of the petition had shown their support against independence by supporting
“cuerpos patrióticos” formed in answer to the rebellion. Representación, 11.
20
74
against oppression, and equality versus offensive privileges.” The Veracruz citizen’s petition
opposed the petition by the Cadiz and the Veracruz Consulados stating that “the time of conquest is
past and the genius of war has been overthrown to enthrone the god of Trade.” New Spain could not
continue limiting its production to the needs of the metropolis. Before, trade dependence was
accepted by nations but “now everything has changed, nations have learned to understand each other,
have agreed on other principles and have decided to share enlightenment (luces) and wealth, forming
75
a divisible (partible) fund distributed through free and reciprocal trade.”
In sharp contrast to the Veracruz citizens’ petition, a letter against free trade and for domestic
manufacturers was published as a supplement by the city of Puebla newspaper “Edictor
Constitucional” also in 1820, before Independence. The letter, signed by “The True Patriot,” asked
“truly wise men” to cast light on the subject of “domestic ills” and to offer the right (acertadas) ideas
“for removing inconveniences to our prosperity.” The True Patriot pointed to “the incalculable
damages that free trade had brought to all [social] classes,” expanding on articles by the “Edictor
Constitucional” which had denounced “the despotism and tiranny of the previous government
76
system.” Prices of foreign goods, the True Patriot argued, had been extremely reduced causing great
damage to the country, because [domestic] trade was paralyzed and the “unfortunate artisans cannot
afford producing their manufactures.” For the True Patriot the [industrial] arts were one of the main
branches that a good administration should protect, while forbidding any imports that would damage
them in any way. Instead, cotton production was being abandoned because of limited consumption
and of the low price at which the fiber was being sold. Spinners who depended on cotton did not have
work and merchants who sold it going from province to province “do not know what to do with
themselves.” The result was thousands of idle individuals, “sunken in the greatest misery and possibly
possessed by the most shameful vices because a mistaken policy has taken away their honest
77
occupations and the food from their mouth.” The True Patriot wondered at the “many kinds of
cotton textiles we would be looking at and admiring from our able but unfortunate compatriots,” by
consuming domestic cotton. He also ventured that people would gladly pay three times for a vara (.84
meters) of [domestic] corduroy as for English corduroy, because “this money would not leave our
home but circulate around all the classes; much of it would go back to the purses from where it
came.” The “True Patriot,” seemingly making a vague reference to technological improvements, also
yearned for the time when work would be simplified “through practice and the enlightenment (luces)
78
of society,” reducing costs from three to one or one half.
As Mexico was becoming Independent a flyer entitled “The Interests of Puebla de los
74
Representación, 38-39.
75
Representación, 49.
76
The “True Patriot” was seemingly referring to Ferdinand VIII’s suppression of the 1813
liberal reforms by the Cortes of Cadiz, restored by the Riego Revolution in 1820.
“Suplemento al Edictor Constitucional número 7, sobre el contrabando inglés, por Belice”
(Puebla: Oficina del Gobierno, December 1, 1820). Reprint in: El comercio exterior y el
artesano mexicano. Ed. Luis Chávez Orozco (Mexico: Publicaciones del Banco Mexicano de
Comercio Exterior, 1965), 35-36.
77
Suplemento, 36.
78
Suplemento, 38.
21
Angeles Well Understood” and signed by “Filalethes,” opposed the creation of a Consulado in
Puebla. The Consulado had been authorized by Agustín de Iturbide, after he entered the city at the
79
head of the triumphant insurgent army in August of 1821. Filalethes, like the “True Patriot,” had
concerns about the nascent country’s (and mostly Puebla’s) industry. However, he did not argue
against free trade but against Consulados as not beneficial for trade but only for certain merchants.
And, unlike the Veracruz petitioners’ opposition to independence, Filalethes denounced the Mexico
City Consulado and merchants in the city’s Parián market, who were mostly wealthy Spaniards, as
actors in political intrigue against legitimate authorities, and as enemies of freedom, and of Mexican
80
independence.
Filalethes also denounced Consulados for opposing domestic industry both in Spain and in
New Spain after comercio libre was established. He offered as an example the request to the king by
the city of Barcelona Consulado to prohibit and suppress factories of “Criollo printed cotton fabrics,”
81
hats, galloons, wool fabrics and thick flannels in [the cities of] Mexico and Puebla.” Likewise, he
criticized the opposition of the Veracruz Consulado to comercio libre in 1811, and the support of
82
troops fighting against Independence by New Spain’s Consulados.
Filatheles deplored the decadence of commerce in Puebla, which had no looms, no industry
and no exports; its goods and textiles could not compete in domestic markets with cheaper and better
products from abroad. He asked Puebla inhabitants to send the city’s “most ouststanding professors”
to the United States of America, to learn the Indian way of weaving in the main cotton factories and
83
to bring “the most necessary machines for your looms, mainly spinning and ginning machines.”
Both the True Patriot and Filalethes attested to the decay of domestic industry before free trade
policies, showing the effects of competition by foreign (mostly British) textiles, and of the War of
Independence. Interestingly, Filalethes could still argue for domestic industry without opposing free
trade, but the True Patriot’s letter foreshadowed the polarization of the debates on Free Trade versus
National Industry, after free trade policies were put into effect.
Manuel Ortiz de la Torre’s Discourse and Francisco García’s Exposición: The Uses of Political
Economy in Early Independent Mexico
Political economy had a great appeal for the Mexican elite after Independence, as a means to
79
The Diccionario Porrúa identified “Filalethes” as the Independence leader José María de
Bustamante. Diccionario Porrúa, s. v. “Consulado de la Nueva España (Cd. De Puebla);”
Lucas Alamán, Historia de México, 170.
80
“Intereses de la Puebla de los Angeles bien entendidos” ((Puebla, Oficina del Gobierno
Imperial: y reimpreso en México en la Imperial de D. Alejandro Valdés, calle de Santo
Domingo, 1821), 2-3.
81
Intereses, 4.
82
Intereses,7.
83
Intereses, 11-12.
22
move away from colonial darkness (obscurantismo) and to organize the new nation following
84
scientific principles. The Academia Mexicana de Economía Política, founded in 1824 with these
goals in mind, included among its members the prominent free traders José María Luis Mora, one of
the most active promoters of political economy after Independence, and Manuel Ortiz de la Torre,
85
“the most vigorous... doctrinaire in the mid twenties,” according to Charles Hale. Political economy
was also present in the movement to reform higher learning institutions. Earlier, in 1822, Mora had
recommended to the Regencia the creation of a course on political economy, which he taught for the
first time that year, at the Colegio de San Ildefonso, as the introduction to studies of jurisprudence.
86
In 1824, Mora proposed the creation of an Establecimiento de Educación with a chair of political
economy in the Estado de Mexico, where he was a deputy. And in 1830, Mora founded the periodical
El Observador, one of whose main purposes was to educate Mexicans on political economy issues.
Later, in 1833, with Mora’s intervention, political economy became part of the curriculum at the short
lived Establecimiento de Estudios Ideológicos y de Humanidades, one of the six Establecimientos de
Estudios Mayores created by the liberal administration of Valentín Gómez Farías to replace the
National Pontifical University, a survivor of the colonial period. Lucas Alamán, also an enlightened
innovator, established the first course of political economy in the Colegio de San Juán de Letrán in
1837.
87
Besides its role in education reform after Independence, political economy was the vehicle
for the first debates on free trade versus national industry, as we saw in Chapter 4. It should be noted
84
See, for example, Elí de Gortari?
85
Hale, 256.
86
Regencia.
87
Elí de Gortari, La ciencia, 279-280; Charles Hale, Mexican Liberalism, 258; José Valadés,
Alamán, 373. Enciclopedia de México s. v. “Economía;” For the Colegio de San Juan de
Letrán see Guillermo Prieto, Memorias de mis tiempos (Mexico: Editorial Patria, 1969).
23
that not only free traders were interested in political economy. Alamán, a “pragmatist” interested first
in mining and later in textile manufactures, often quoted Adam Smith. And Cayetano Portugal, a
participant in the free trade debates for domestic industry, became a member of the Academia
88
(Mexicana) de Legislación y Economía Política in 1827. The debates and their actors illustrate the
uses of political economy for conflicting economic and nation building projects. Free traders drew on
political economy as a science whose facts were “natural” and supported their arguments to a large
extent on Adam Smith’s Wealth of Nations and on the Treatise on Political Economy, authored by
Smith’s follower and popularizer Jean Baptiste Say. Artisans, and later industrialists, opposed free
trade, demanding protectionism, prohibition and government intervention in the economy, following
the idea that nations should not depend on others in goods they can produce, as a nation building
principle. Pragmatists did not question the principles of political economy absolutely but rather their
aplicability to Mexico under the circumstances. Their arguments against free trade were based on the
technological disadvantage of domestic vis à vis foreign producers, evidenced by the application of
free trade policies in Mexico and their effects on domestic artisans. Thus, they questioned the level
playing field presupposed by political economy, as well as its optimistic assumptions about the
balance resulting from trade among nations. Next, I will discuss Manuel Ortiz de la Torre’s
“Discourse on Political Economy” and Francisco García’s “Esposition on the... prohibition of certain
manufactures and goods,” to contrast their more systematic presentations of “doctrinaire” and of
“pragmatic” principles, beyond the isolated remarks by participants in the debates on free trade versus
national industry presented in Chapter[s] 4 [and 5].
As was the case with other free traders, Ortiz’s Discourse was doctrinaire on principles, but
more flexible on their application. Freedom of industry and trade, based on Adam Smith’s political
economy, was for Ortiz the “natural” way to organize the economy of the new nation, and the key to
88
For Cayetano Portugal, see Manuel Orozco y Berra, Apéndice, s. v. “Portugal (Illmo. Sr. D.
Juan Cayetano).”
24
progress and nation building. His vision, he maintained, was confirmed by the prosperity of
“advanced nations” which, like England, had followed the right path, and by the failure of other
nations which, like France and Spain, had followed the wrong path. Ortiz and García, like other
Mexicans after Independence, looked at the rest of the world to find confirmation of their views on
the best way to achieve economic progress, as part of their nation building projects. And both free
traders and protectionists felt pressured to follow the right strategy for success in economic
competition lest Mexico be left behind. But García’s Exposición stood in great contrast to the views
of Ortiz and other free traders. García’s economic and nation building project (like that of other
pragmatists) was based on domestic industry for which he thought free trade was being destructive.
Additionally, as an advocate of national industry, García paid more attention to technological issues
and to the situation of artisans than free traders did. And, contrary to free traders, he drew on Adam
Smith and Jean Baptiste Say, as well as on examples from other nations, to support protectionist
views.
Manuel Ortiz de la Torre delivered his famous “Discourse on Political Economy” at the
Colegio de San Ildefonso in 1825, as part of a literary contest in honor of President Guadalupe
89
Victoria, also a supporter of free trade policies, as we have seen. Ortiz had succeeded Mora in the
chair of political economy at San Ildefonso in 1823, and played a prominent role in the debates on
90
free trade [as a member of Congress] as we saw in Chapter 4. Ortiz divided the Discourse into two
89
Manuel Ortiz de la Torre, “Discurso sobre los medios de fomentar la población, riqueza e
ilustración de los Estados Unidos Mexicanos, presentado en el certamen literario con que el
colegio de S. Ildefonso recibió a su alumno el Ciudadano Guadalupe Victoria, primer
presidente de la república” (Mexico: 1825). Reprint: For another extended presentation of
Ortiz’s views see: Manuel Ortiz de la Torre,“Discurso de un diputado sobre la introducción
de efectos extranjeros,” (Mexico, 1823). Reprint: El Trimestre Económico, 12 (1945): 283315.
90
Besides Mora and Ortiz, other prominent members of the Colegio de San Ildefonso
reported by Charles Hale were: Bernardo Couto, Francisco Fagoaga, Luis Gonzaga Cuevas,
Domingo Lazo de la Vega, José Nicolás de Oláez, Melchor Múzquiz, José Julián Tornel and
25
main sections: a theoretical analysis of “the influence of freedom” [on production] which he found
“somewhat abstract,” and a historical analysis he justified by stating that “experience provides more
palpable arguments.” Inspired by Smith, Ortiz argued both for freedom of trade and of industry as a
freedom from external hindrances to producers, including government intervention, relying, instead,
on the symmetry of trade transactions. And he based Mexico’s exchanges not on textile products but
91
on “our gold and silver.”
Ortiz grounded his theoretical analysis on authority in scholastic fashion, assuring his
92
audience that he had only used “principles established among modern political economy authors.”
The analysis aimed at removing obstacles and increasing stimuli in order to attain “population, wealth
and enlightenment” which, Ortiz argued, were the “principal elements that constitute the greatness,
93
power and well being of a society.” Why population? After Independence, Mexicans were
concerned with the underpopulation of the country. They were possibly also influenced by eighteenth
94
century pre-Malthusian ideas on population as a source of prosperity for countries. As for wealth,
Ortiz, paraphrasing Adam Smith, claimed that for “productive industry, all immediate management
and direction should be left to individuals whose interests, knowledge and means... are no doubt
greater than those that the most vigilant and careful government could have.” Individual interest was
for Ortiz “the most secure spring of human actions,” while public authority was established to make
what individuals could not do by themselves to attain the common good. Therefore, the auxiliary
duties of government were to protect freedom of industry from attacks, to provide the means of
enlightenment for production, to ensure that entrepreneurs enjoyed their products peacefully, and to
assist with infrastructure works (aucsilios escitativos o dispositivos), by opening canals, and building
95
bridges and roads, as Adam Smith had expounded in Book 5 of the Wealth of Nations.
Since, for Ortiz, obstacles came from “lack of freedom or knowledge,” removing
obstacles meant, first, granting freedom to choose the type, objects and instruments of industry. In his
José María Bocanegra. Hale, Liberalism, 256-257, 293; See also Elí de Gortari, La ciencia,
279-280; Enciclopedia de México, s.v. “Economía.”
91
Ortiz, Discurso, 77-78.
92
Ortiz, Discurso, 67. Besides several authors now forgotten, such as Jean C. L. Sismondi,
Ortiz quoted Smith, Say, Jeremy Bentham, Etienne de Condillac, Florez de Estrada,
Alexander von Humboldt, the abbé Guillaume de Raynal and Thomas Malthus.
93
Ortiz, Discurso, 59.
94
For discussions of underpopulation after Independence, and their relation to the Texas
territory, see Lucas Alamán, Historia de México, vol. 5; “Introduction,” above.
95
Ortiz, Discurso, 60, 62. For Smith, see Book Five, Part Three, “Of the Expence of Publick
Works and Publick Institutions,” Wealth of Nations, 413, ff.
26
long list of obstacles, based on Adam Smith, Ortiz put first the prizes granted to a particular industry
(except privileges related to inventions), “because... they foster... a certain product, while setting back
96
and discouraging others.” Other obstacles were exclusive rights, taxes (contribuciones), ties to
97
territorial property, learning regulations and the “system of prohibition” for imports and exports.
The increase of production or wealth was also hindered by lack of freedom, by ignorance in questions
of industry, and by lack of consumption (consumos) of expensive products as a result of the lack of
competition among producers, in turn caused by prohibitions or restrictions. Likewise, the lack of
competition assured the sale of imperfect goods that were of little value. By contrast, when there was
freedom of industry, consumer goods (las mercaderías que se consumen) were subject to extensive
competition and those with little use or benefit, such as cigarettes produced by the government
monopoly (estanco), were necessarily discarded.
Production was equally hampered by the lack of producers, which was caused by
regulations, apprenticeships and masters’ titles (maestrías) in industrial arts. Likewise, prohibitions or
surtaxes on foreign good imports increased the number of customs employees (resguardo aduanal),
of smugglers and beggars. The scarcity of productive capital, occasioned by restrictions which
increased the cost of goods, was another limit on production, along with the accumulation of capital
in a few hands, which was often employed in luxury consumption and handled by administrators who
had no personal interest in gain. Capital, in turn, was accumulated by a few individuals through
monopolies, exclusive privileges, entailments of land property, regulations on [industrial] trades and
restrictions to trade. But this great hindrance was also removed by freedom, according to Ortiz who,
like Adam Smith, opposed monopolies of producers and merchants and encouraged their competition
under free trade.
Ortiz’s historical survey compared how Spain, other European countries, the United States and some
of the new Spanish American republics had fared, according to whether they had followed free trade
98
or protectionist principles. For Spain, Ortiz followed Alvaro Flórez Estrada’s assessment that the
two centuries from Charles I... to Philip V (from the Habsburg to the beginning of the Bourbon
dynasties) had been a period of decadence. Ortiz gave as reasons the restriction of trade with “the
Americas” to the port of Seville, [a defective] customs [system], the prohibition of imports and
exports, monopolies of necessary articles such as salt and tobacco, and tax increases. “The effect,
Ortiz concluded, was... the ruin of industry which was reduced to commissioned trade, which was
most miserable (mezquino) and precarious, together with the rise in price of articles of necessary
consumption; the increase of smuggling and of beggars, and the decrease of Spain’s population by 6
million people from 1688 to 1715. By contrast, during the “period of freedom,” from Ferdinand VI
(1746-1759) to Charles III (1759-88), many hindrances were removed by outfitting (habilitando)
ports, decreasing taxes (contribuciones) and abolishing duties (derechos). Trade with the Americas
increased, as did treasury revenues (rentas del fisco) and ships, while the port of Cadiz also
99
benefitted.
96
Discurso, 61.
97
Discurso, 61-62.
98
A similar analysis was made by Francisco García, from the “pragmatic” standpoint, as we
will see below.
99
Discurso, 69-70.
27
Swiss cantons were another example of prosperity which, Ortiz claimed, “have the most
complete freedom of industry, and [whose] productive branches are most prosperous; wealth is well
distributed; consumption articles are cheaper than in most other countries, and population is very
large and well fed, clothed and housed. By contrast, [Jean Baptiste] Colbert’s prohibitive measures in
France were not beneficial to the state, and had set back agriculture and trade. And manufactures
supported by customs or prohibitions had decayed, whereas those supported by freedom of industry
had made very quick progress. Likewise, for Ortiz, England was very prosperous not because of
100
prohibitions but in spite of them. There was freedom of labor and the obstacles to artisans and
peasants (labradores) had been abolished. His picture was not entirely optimistic, however. English
agricultural products had a high price, the owners of (capital) funds were very few, day laborers
101
(jornaleros) earned a minimum for survival and many people lived on public charity. [were these
echoes of the “brave new industrial world”?]
On the American continent, the United States had prospered, Ortiz considered, “under an
almost indefinite freedom,” the value of [its] manufactures having gone from seven to twenty million
pesos in twenty years. Likewise, Havana, Brazil, Santo Domingo and the Provinces of La Plata had
prospered because of free industry. Finally, Ortiz found in Mexico an increase of mining, trade and
“even of our miserable manufactures” since the years of comercio libre, consistent with his judgment
102
of what had occurred in Spain.
After his historical survey, Ortiz touched briefly on labor problems, one of the most
debated issues after the application of free trade policies in early independent Mexico. He asserted
categorically that “the decrease of occupations for our working hands does not diminish because of
the freedom of industry in relation to foreign trade. It does not happen nor can it happen. Trade does
not give except in terms of what it receives. The more we receive from abroad the more we will give
103
in exchange.” Again, Ortiz seemed to rely on a pre-existing symmetry, postulated by Adam Smith,
which ensured the “harmonious operation” of market agents through the laws of supply and demand.
He found that variations in occupations since “moderate freedom” [was established] were the effects
of freedom and were “no doubt, most natural, and... must be believed, most beneficial to the majority
104
of the nation.”
However, “freedom” was not “absolute” for Ortiz. Limits had to be imposed by morals
(obscene pictures), religion (working on holidays) and politics (trading with the enemy). And, in spite
of his “doctrinaire” theoretical position, Ortiz took a more moderate practical approach (echoing both
Adam Smith and Jean Baptiste Say), as he asserted that freedom “cannot be established all at once
because it can cause the ruin of the economic system.” But Ortiz had no doubts that free trade was the
right (and only) way to go. He confidently concluded that “once... freedom, instruction and security
are achieved, the sure consequence is that [these measures], will be taken partly by public authority,
partly by individuals, and [will be] regulated and directed by science, in the most advantageous way
100
Discurso, 70-72.
101
Discurso, 73-74.
102
Discurso, 75.
103
Discurso, 77-78.
104
Discurso, 78.
28
105
for the nation”
The Exposition by Francisco García
Francisco García´s Exposición of July 6, 1823, is a short presentation of arguments
against free trade and for national industry, paralleling Manuel Ortiz de la Torre’s discourse on free
trade. García (1786- 1841) was born in the state of Zacatecas and had studied scholastic philosophy
and theology in the Seminary of Guadalajara. Afterwards, he went back to the state of Zacatecas
where he had mining interests, already before 1821. There, a biographer claimed, García continued
his scientific education on his own. In 1821, he became alderman (regidor) in the state’s capital city
of Zacatecas. Later, García became the city’s representative to Mexico’s Constituent Congress in
1823 and member of the Senate in charge of the Public Treasury Commission. García belonged,
following Charles Hale, to a group of politicians with industrial interests who supported national
106
industry; part of a “new group of provincial leaders” where “artisans found their champions.”
Although not an academic, García had respectable credentials on political economy issues. He was
the author of a treatise on public finances, Sistema Rentístico de Mexico (Mexico’s Rent System)
which was approved by the Constituent Congress, and was appointed Secretary of the Treasury by
107
President Guadalupe Victoria from Nov. 2, 1827 to February 15, 1828. From that year until 1834,
García became governor of the state of Zacatecas, where he promoted public safety, manufacturing
108
(fabril) industry, mining and public instruction. As an initiative to increase textile production, he
invited to move to Zacatecas families of artisans, masters and tradesmen, to establish manufactures of
109
cotton, silk and wool in the districts of Jerez and Villanueva.
Francisco García’s Exposición stands in great contrast to Manuel Ortiz’s Discourse, as a
representative example of “pragmatic” approaches to political economy. The occasion of the
Exposición was an Opinion by the Congressional Treasury Commission on the prohibition of foreign
manufactures and goods. García began by stating that “The Mexican [nation]... is very distant from
the order of things presupposed by the principles of the science [of political economy]... and therefore
they cannot be applied without a remarkable modification.” Among local realities that needed to be
taken into account were Mexico’s institutions, “the despotism under which it has groaned... the
110
misery, ignorance and inertia it has fallen into.” However, instead of defending prohibitions
105
Discurso, 80.
106
Charles Hale, Mexican Liberalism, 255.
107
J. S. Noriega argued that García´s analysis of a Treasury
Opinion presented in the Senate helped to reestablish domestic
credit. See Orozco y Berra, Apéndice, s. v. “García, (Excmo Sr. D. Francisco);”
Diccionario Porrúa, s. v. “García Salinas, Francisco.”
108
Orozco y Berra, Apéndice, ibid.; Diccionario Porrúa, ibid.
109
This is a little known experience, outside mainstream historical research on Mexico’s
textile industry, which deserves further exploration.
110
Francisco García, “Esposición sobre el dictamen en que la comisión ordinaria de Hacienda
consulta la prohibición de ciertas manufacturas y efectos extrangeros” (Mexico: Imprenta de
D. Mariano Ontiveros, calle del Espíritu Santo, 1823). Reprint: Protección y Libre Cambio,
29
absolutely, García followed Say’s opinion that they needed to be suppressed, not suddenly but
gradually, arguing that “time is needed for capital and hands to be employed in more favorable
111
productions for the nation” than those controlled by a monopoly.
García next examined “some of the principles on which freedom of trade rests.” He
opposed, first, the application to Mexico of the principle that there was no loss in trade relations
because a product was traded for another product of equal value. Instead, he argued, trade was not
equal because Mexico´s wealth was decreasing; trade meant a loss, because capitalists devoted to
112
trade could have gains, while the sum of capitals decreased. Second, García opposed the argument
that if domestic producers were displaced by foreign manufatures they would find other occupations
with whose products they could buy what they needed. García dwelt on the technological losses
brought about by the loss of occupations. It was difficult to go from one industry to another, he noted,
since “the place, machines, tools and materials proper for one type of production are not for another;
the knowledge and habits acquired for mechanical operations are lost with the destruction of the
manufacture.” A considerable capital would be lost and would need to be replaced to produce a new
manufacture. García’s argument, based on technology and training, complicated Adam Smith’s and
other free traders’ assertions that “To the greater part of manufactures... there are other collateral
manufactures of so similar a nature that a workman can easily transfer his industry from one to the
113
other.” García added that [domestic] producers could not go into another industrial branch, since
anything could be produced more cheaply abroad. They could not go into trade either, which would
resent the lack of industrial products to exchange and would need, instead, to find new occupations
for its own agents. Likewise, agriculture would be affected by the lack of consumption, because of its
ties with the other two sectors. For García, depending only on agriculture would also mean a setback,
with the added obstacle of the existing institutions of land property, which he considered
114
“barbarian.”
Next, García tackled objections against prohibition creating a monopoly which resulted
in higher prices for consumers and in lack of emulation for improvements. He was confident that “in
a large nation” there would be neither monopolies nor lack of competition. Instead, more capital
would be available and producers would try to have cheaper and better quality products, since he
expected the arrival of machines to simplify work, the acquisition of knowledge to improve
115
[industrial] arts and the arrival of “many foreign entrepreneurs.” A close free trade argument was
that paying higher prices for domestic products represented an added tax on consumers. García’s
response was that, since Mexico’s consumers were also “agricultural, industrial and commercial”
producers, if industry was destroyed, consumption and profits would decrease in the other two
branches: “It is no use to provide us with cheaper goods that we require, if the means to acquire them
30.
111
García, Exposición, 30.
112
Exposición, 32.
113
Exposición, 33; Smith, Wealth of Nations, 298-299.
114
[Land distribution] García, Exposición, 33-34.
115
Esposición, 34.
30
116
are taken away in the same proportion.” García equally opposed the charge that stopping the entry
of foreign products through prohibition forced domestic industry and capital to a less profitable
occupation. Instead, the task ahead for him was “to clear the way” for domestic manufacturers, who
were at a disadvantage in relation to foreign producers, “in the first attempts to produce coarse cotton,
wool and hide manufactures, which are abundant in our country.” García drew on Jean Baptiste Say
against Adam Smith, in support of his argument, pitting the the two political economy authorities
against each other:
Say, refuting Smith, says: that maybe it is convenient for a government to
support productions which, although causing losses in the beginning, will
yield certain gains in a few years, and shows that the principles on which
Smith is based to assert the opposite are not applicable to many nations
117
which are in a very different situation to the English nation.
García added that Say, who approved of support in the form of capital from public finances, would
approve prohibitions even more to bring domestic manufactures to such a state of prosperity as to
give wealth to the nation and not be damaged by competition from imports. Then, García proposed,
with Smith’s and Say’s agreement, to put similar taxes on foreign as on domestic products in order to
avoid privileging them. Still, for García, more was required since the backward state of domestic
industry increased production costs to a point that made them uncompetitive, together with lack of
capital, machines and tools, and the lower value of currency. The duties of foreign manufactures
needed to be increased to bring them into balance with domestic ones. But this “unreliable method”
would amount to prohibition. Thus, García stated: “we have to (nos hallamos en el caso de) appeal to
118
prohibition.”
García rejected free traders’ comparisons of Mexico with other countries since it meant
appealing to facts when “reasons could not be resisted.” He found harder to analyze “distant facts”
than “what is happening right before our eyes.” Still, he centered on “American” countries, which had
116
Exposición, 35.
117
[As we know, what Say (and García) proposed would be the road followed in the
nineteenth century by countries other than England, as a way to deal with disadvantages and
create a level playing field for countries in the new industrial economy.] Exposición, 35.
118
Exposición, 36.
31
recently become independent from Spain, to examine the argument that a large amount
(concurrencia) of imports, bought with domestic products, had not produced the same effects as in
Mexico but had stimulated production and made those countries prosperous. He found that, being two
to three times farther away from Europe and the United States, those countries could not import large
manufactures, which were unprofitable (incosteables) because of their volume. Secondly, those
countries had smaller populations and more domestic products to trade than Mexico which, excepting
one province, only had silver. Further, more people were occupied in Mexico´s industry than in the
other countries, in the cities of Mexico, Guadalajara, Puebla, Querétaro, San Luis, and León.
Unlike in Mexico, García considered, the population in the other countries was placed in
coastal areas, silver was more expensive and manufactures were cheaper. He highlighted Brazil,
which had not undergone a “disastrous” revolution and “has imported capital and industrious men,”
unlike Mexico where both had been taken away and production was paralized. Likewise, he
considered “sad and illusory” to rely on silver (which Ortiz de la Torre had labeled “our peculiar
problem”) because it supposed “giving up [industrial] arts on which the prosperity of states depends.”
For García, the main problem was that mining would only foster agriculture, industry and trade as
needed for its consumption. And the abundance of currency (numerario), together with the lack of
119
circulation, would lower its value while increasing the value of foreign manufactures.
Unlike the free traders’ optimistic outlook, García thought that it would take a more or
less long period before a balance finally came, after the disruption of domestic industry by free trade.
Meanwhile, a large part of the population would perish lacking the means for survival. García alluded
to the desperate situation of artisans, warning that “people will fight to survive by attacking
property.” As a way out, he proposed several measures such as “prohibiting manufactures that have
begun to develop, and giving absolute freedom to all others.... facilitating the settlement of
119
García, Exposición, 38-39.
32
industrious foreigners; introducing machines that simplify labor, as well as knowledge to which the
[industrial] arts owe the perfection they enjoy.” Only then he saw the possibility of easing restrictions
120
on imports, “beginning with products with which we can compete with foreigners without risk.”
The historian Charles Hale, with an eye on the factory system and private entrepreneurs, considered
that García’s ideas on economic development “remained very much in embryo in his twelve page
pamphlet. Absent were any positive measures to form the capital necessary for modernizing and
121
expanding industry.”
García’s Utopia, based on manufacture production as a nation building principle for
Mexico, drew to a large extent on theoretical arguments which opposed the equally theoretical
arguments of free traders, showing different uses of political economy. Pragmatists also reacted in
different ways to immediate experiences of declining domestic manufactures and producers than did
doctrinaires, who held fast to the expectation of general prosperity through trade. Protectionists made
reference to experience to criticize political economy from a practical standpoint, looking at the
problems left unsolved by theory: consumers are also producers. Coherent but largely incompatible
worlds seemed to emerge from either the doctrinaire or the pragmatic perspective leading, as we have
seen, to debates and political struggles.
120
García, Exposición, 40-41.
121
Hale, 255.